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Closing the Life Insurance Protection Gap


  • The number of families having life insurance coverage peaked in 1971 at 85.4%, according to The American Council of Life Insurers (ACLI).
  • The U.S. has a $25 trillion mortality protection gap posing potential catastrophic financial challenges for those affected, per Swiss Re.

There is a significant life insurance protection gap in the U.S. Per a LIMRA study1, only 52% of Americans own a life insurance policy, while 41% of both insured and uninsured individuals report they don't have sufficient coverage. And though the P&C insurance sector has made great strides in digital transformation, the life space lags behind. These challenges are fueling a commitment to innovation in the life insurance space.

What is the Life Insurance Protection Gap?

The life insurance protection gap refers to the difference between the amount of life insurance people carry and the amount they would actually require to meet financial obligations and sustain the surviving dependent family should the main breadwinner pass away. Per Swiss Re, the U.S. has a $25 trillion mortality protection gap posing potential catastrophic financial challenges for those affected.2 The American Council of Life Insurers (ACLI) reports that the number of families with life insurance coverage peaked in 1971 at 85.4% and has been in decline almost every year since.3

Samantha Chow, Global Head of Life Insurance, Annuities, and Benefits at Capgemini Financial Services notes that, “Significant advances in healthcare, changes in the socioeconomic and demographic characteristics of the population and lower war casualty rates have led many to experience mortality resistance…Despite the recent pandemic, the threat of death seems less imminent than it once did.”4

How Did the Pandemic Impact Interest in Life Insurance?

The COVID-19 pandemic understandably caused the general population to not only consider their mortality, but also the implications for their families. And to some extent, the pandemic did stimulate Americans to purchase or increase life insurance protection. According to Deloitte, the Medical Insurance Bureau (MIB) Life Index showed insurance applications increased in record numbers in 2021, with significant growth driven by younger age groups.5

Per Alison Salka, Ph.D., Senior Vice President, Head of LIMRA Research, “Younger generations experienced a life-altering event just as they were starting their careers, getting married and having children. The realization of how precarious life can be may have made them more aware of the need to protect their loved ones.”6

Due to continued strong growth in in the first half of 2022, U.S. life insurance premiums totaled $15.3 billion for the year, close to the record-high premium sold in 2021.  Sales slowed in the second half of the year, however, as anxiety around COVID-19 was replaced with concern over inflation and the economy.7

What About Gen Z and Millennials?

The 2023 Insurance Barometer Study8 conducted by LIMRA and Life Happens indicates that just 40% of Gen Z adults and 48% of Millennials have life insurance. Almost half said they either need to get coverage or increase their life insurance protection, representing 53 million adults.

Even though younger generations are spurring recent growth, why don’t more people from the Gen Z (born between 1997 and 2012) and Millennial generations (born between 1981 and 1996) buy life insurance or increase what they have? Results from the study showed three major reasons:

  • They believe it’s too expensive
  • They have other financial priorities
  • They are not sure how much or what type to buy

Other barriers to life insurance attainment also include the lack of digital capabilities and an onerous application and approval process. In the past, applicants had to complete a medical exam and lab work or endure an evaluation of their medical history to obtain a policy. Today, however, there are alternatives. A less intrusive, accelerated underwriting process requires applicants to answer just three health questions and to provide permission to obtain additional information from the Medical Information Bureau (MIB), their prescription history, and their motor vehicle report.

Per Capgemini’s Chow, education is critical to closing the generational life insurance gap. “It is our responsibility to teach Millennials, Gen Xers (and younger generations) that the true value of a life insurance policy is not only realized after one’s death but can also serve as income replacement, an investment vehicle, cover long term care – and more.”9

Taking a New Approach in a Digital-First World

Several insurers have been working to find innovative ways to meet the needs of digital native populations. Prudential Financial’s ‘Stages for Retirement’ education program provides personalized projections on retirement needs, best-fit products, and savings advice for younger generations.9 And Federal Life Insurance Company10 has partnered with global reinsurer Swiss Re and insurtech Reframe Financial to deliver a new product specifically designed for Gen X and Millennial employees that offers a hybrid policy combining Indexed Universal Life insurance with cash value and long term care benefits. Designed for a digitally-savvy population that requires both speed and convenience, employees can apply online and receive a personalized decision within minutes through the elimination of invasive underwriting practices.

Kim Poulopoulos, Head Life and Health Growth Innovation Americas at Swiss Re, explains the impetus behind the new product design: “Finding ways to make life insurance meet the needs of more consumers is a key focus area for us as we strive to close the life insurance protection gap. This offering is powered by Magnum, our automated underwriting solution, together with Reframe’s intelligent tech platform and allows underwriting decisions at the point of sale so consumers know immediately that they have been accepted for coverage.”10

The Path to Closing the Gap

Consumer education, digital transformation and beneficiary engagement are critical components in the path to closing the life insurance protection gap. Improving digital capabilities will enable life insurers to not only enhance operational efficiency, but also connect more effectively with underserved markets and build better relationships with existing and future policyholders. As Maggie Leyes, Chief Creative Officer of Life Happens, and coauthor of the 2023 Insurance Barometer Study, explains, “Younger adults are increasingly looking to buy life insurance online and are more likely to use social media platforms ― particularly Instagram, Twitter and Tik Tok ― to educate themselves. Our goal should always be to meet them where they are.”11

Reinvention is certainly occurring in the life insurance space and it’s fueling a commitment to innovation. In a November 2023 interview with Digital Insurance, life insurtech Quility co-founder and CEO, Brandon Ellison, said, “The life insurance industry is in a state of complete transition and growth. From marketing and customer relationship management (CRM) to underwriting, best-fit selection and delivery of product – almost every aspect of the industry is transforming in ways that benefit clients, agents, and carriers.”12

Recent MIB Life Index results indicate progress and a promising start to 2024. U.S. life insurance application activity saw growth in January 2024 compared to January 2023, with year-over-year activity up almost 5%, achieving the highest overall activity for any January on record.13 

Delivering More

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  1. LIMRA – https://www.limra.com/en/newsroom/news-releases/2023/new-study-shows-interest-in-life-insurance-at-all-time-high-in-2023/
  2. Swiss Re – https://www.swissre.com/reinsurance/life-and-health/reinsurance/america-lh.html
  3. InsuranceNewsNet – https://insurancenewsnet.com/innarticle/life-insurance-industry-sales-focus-change-cited-in-falling-policy-counts
  4. Capgemini – https://www.capgemini.com/insights/expert-perspectives/closing-the-generational-life-insurance-gap-with-education/
  5. Deloitte – https://www2.deloitte.com/us/en/insights/industry/financial-services/life-insurance-coverage-gap.html
  6. LIMRA – https://www.limra.com/en/newsroom/news-releases/2023/new-study-shows-interest-in-life-insurance-at-all-time-high-in-2023/
  7. Deloitte – https://www2.deloitte.com/us/en/insights/industry/financial-services/financial-services-industry-outlooks/insurance-industry-outlook.html/#life
  8. LIMRA – https://info.limra.com/gen-zy-barometer
  9. Capgemini – https://www.capgemini.com/insights/expert-perspectives/closing-the-generational-life-insurance-gap-with-education/
  10. GlobeNewsWire – https://www.globenewswire.com/news-release/2023/5/9/2664629/0/en/Federal-Life-Partners-with-Swiss-Re-and-Leading-Insurtech-Company-to-Bring-a-New-Digital-First-Insurance-Solution-to-Market.html
  11. LIMRA – https://www.limra.com/en/newsroom/news-releases/2023/new-study-shows-interest-in-life-insurance-at-all-time-high-in-2023/
  12. Digital Insurance – https://www.dig-in.com/list/quility-q-a-the-state-of-digital-in-life-insurance
  13. MIB Group – https://www.mibgroup.com/resources/life-index-reports/jan-2024-us-life-index/


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The One Inc Content Team strives to provide valuable insights about digital trends and payments innovation for the insurance community.

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